CGT and Equities
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capital0ne
Posts: 872 Forumite
Okay, here's one for the experts.
I have investments not in an ISA wrapper so I need to use up my CGT allowance of £11,300 this tax year, 17/18, by selling some of a global ETF that's done well in the last 4 or so years.
That's easy, I know how much to sell, but here's the question, you are not allowed to buy back the same investment for thirty days. What about buying a similar investment, for example sell VWRL and buy SWDA say, a day later. Would that get around the thirty day rule?
For next year 18/19 I plan to bed and ISA £20k to soak up further CGT.
I have investments not in an ISA wrapper so I need to use up my CGT allowance of £11,300 this tax year, 17/18, by selling some of a global ETF that's done well in the last 4 or so years.
That's easy, I know how much to sell, but here's the question, you are not allowed to buy back the same investment for thirty days. What about buying a similar investment, for example sell VWRL and buy SWDA say, a day later. Would that get around the thirty day rule?
For next year 18/19 I plan to bed and ISA £20k to soak up further CGT.
0
Comments
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Yes. You don't even have to wait a day, either -- sell and buy on the same day is fine too.capital0ne wrote: »What about buying a similar investment, for example sell VWRL and buy SWDA say, a day later. Would that get around the thirty day rule?0 -
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Yes there is a '30 day rule regarding buying back the same investment' but you are proposing buying a similar investment as in your OP, VWRL and SWDA0
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That indeed was the question, I intend to buy a 'similar' global ETF so althogh both are global they are a different investmant in the eyes of the tax person and CGT - so that suits me just fine.Yes there is a '30 day rule regarding buying back the same investment' but you are proposing buying a similar investment as in your OP, VWRL and SWDA
Actually a quick google and I found this:
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2. Consider bed and breakfast
If you are sitting on asset gains, you may wish to 'bed and breakfast' your asset to make use of your annual CGT exemption. The idea is to sell now, make a capital gain that is absorbed by the annual exemption and repurchase at the current, higher, cost. There is no tax to pay now and future gains should be lower, as you will have lifted the base cost that will be used to calculate future gains.
To discourage this, the government has changed the rules so that you now have to wait 30 days before making the re-purchase, otherwise the sale and re-purchase are ignored for tax purposes and the shares are treated as if you hadn't sold and repurchased them. You face the risk that the share price will move against you in that 30-day gap.
One way around this is to sell while your spouse or civil partner makes an identical purchase on the same day, a tactic called bed and spouse. This may have the added advantage of transferring income generating assets to a spouse with a lower marginal tax rate.
Another option is to bed and ISA, by re-purchasing the shares within an ISA, so that higher-rate tax is avoided on future dividend income and future gains are exempt from CGT altogether.
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We could do bed and spouse as she has a CGT to rinse out, but i her case a single bed and ISA will do for this year so that's not an option for me.
Anyway in my case a sell and re-purchase of a different ETF or IT will suit my strtegy just fine, then I'll bed and ISA in April the rinse out the remaining gain.0
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